Inside the Making of a Better-Breakfast Franchise

Tom Ferguson, Brian Wiles, and Andy Seamans (left to right) polished the Rise franchise systems as it grew from one to seven units.

Rise Biscuits & Donuts, a Durham, North Carolina–based better-breakfast concept, announced the launch of its franchise program in the summer of 2014. Since then, the brand has given QSR an inside look at its growth process. Here, we walk back the last two years, exploring the mechanics of franchising as Rise expanded from one unit to seven.

June 2016

The summer humidity seethes over the brick and concrete of Raleigh, North Carolina’s Brier Creek Shopping Center, a sprawling retail complex at the western edge of the city that’s home to dozens of trendy restaurant concepts.

Tom Ferguson, a husky 51-year-old with a fashionable haircut and permanent five o’clock shadow, walks into the nearly 3,000-square-foot space that will in two days become the seventh location of his better-breakfast concept, Rise Biscuits & Donuts. It’s National Doughnut Day, and while the not-yet-open store did hand out free doughnuts to Brier Creek’s early-bird crowd, employees and franchisee Ty Gwennap are forced to turn away hopeful locals peering in the floor-to-ceiling windows throughout the morning.

The space is buzzing with workers hurrying to finish details—hanging menuboards, dragging furniture into the back office, prepping staff—but Ferguson has eyes for only one person, a shorter man in glasses and white worker’s shirt emblazoned with the Rise logo. Rise’s COO, Brian Wiles, beams when he sees Ferguson, and the two men embrace in a bear hug.

There’s reason to celebrate: Just that morning, the two received confirmation that Rise’s biggest franchise deal to date had been finalized. MDO Holdings, a Raleigh-based franchise company, had inked a deal to open more than 20 Rise units across the South.

“What it means is a big player is interested in us,” Ferguson says later of the importance of the deal. “It’s four times bigger than any other deal that we’ve signed, plus with someone who’s been in the business 35 years.”

In many ways, the deal is validation for Ferguson, Wiles, and their business partner and Rise’s CFO, Andy Seamans. Four years after Ferguson and Wiles launched the breakfast fast casual (Seamans joined in 2014), the business is gaining momentum that will carry it beyond its home base in the Triangle region of Raleigh, Durham, and Chapel Hill, North Carolina. All the hard work the business partners have put into designing an easily replicable operation is starting to pay off, and there is now a clear vision for hundreds of locations.

As Ferguson sits in the Brier Creek location’s back office talking through the company’s journey, he acknowledges that his window of opportunity for tweaking the brand is closing. “We know that change takes longer the bigger we get,” he says. “So we worked extremely hard to get the systems in place before we had five stores open.”

Some of those systems come standard with any franchise. For example, there’s the rap sheet of financial specifics, including the 6 percent franchise fee and 2 percent marketing fee, as well as the initial store build-out that’s between $400,000 and $600,000. There are standard menu items, recipes, store hours, and vendors.

But Ferguson and his team are also banking on several differentiators that go beyond standard franchise systems: They ask that each store has a chef manager in charge, and those managers have the option to design their own seasonal doughnut and biscuit items; Wiles and Ferguson each bring a chef pedigree to the corporate team, which has helped develop a stellar training program headed by Wiles; they promote a living wage for employees; there’s a company-wide dashboard that lets franchisees connect with each other and monitor each other’s performance metrics; the customer’s brand experience is priority, and has been carefully designed to maximize the focus on people and quality.

Nothing was set in stone when Rise first opened the doors in 2012. But now, as Ferguson polishes off the concept and prepares to hire someone who can police quality system-wide—and as the five franchised locations and one other corporate location, which have all opened since August 2015, continue to thrive—he feels like the brand is as ready for primetime as it’s ever been.

“That [hire] is the last big piece of the puzzle as far as quality, because then you can say you have controls in your systems, you have a great training team, you have a great product and brand—you set it up, you move on, and then this person follows it,” he says. “That training part, selling it, getting systems in place, and opening it is all going great. It’s what happens after that that is my thing right now.”

April 2016

A cold rain laments the end of spring and impending Carolina heat. At the north end of downtown Durham, in one of the many brick buildings built a century ago to house the city’s booming tobacco trade, some 500 people cram into an expansive warehouse that now serves as an event space and distillery.

At the center of the warehouse, tables form a block “O,” the middle of which is filled with chefs—some of the best in the Triangle, including James Beard winner Ashley Christensen and nominee Matt Kelly—who scurry about assembling special biscuit sandwiches they’ve conceptualized for the occasion. Each represents a Rise location, and each store manager has developed a special doughnut that pairs with the biscuit and a beer from a local brewery.

This is the Big Biscuit Brew Ha-Ha, a charity event organized by Rise that is raising money for the Leukemia & Lymphoma Society. It’s perfectly emblematic of the area and its food scene; flannel-clad Millennials line up for as long as 20 minutes to sample each biscuit, doughnut, and beer, as well as for a chance to talk with the chefs, who, around these parts, are revered as much as Duke basketball players.

Ferguson parades around the Big Biscuit Brew Ha-Ha in a tuxedo, with a string of carnival tickets hung around his neck (attendees use the tickets to vote on their favorite pairings). He’s in his element, a known fixture among all of the foodies who attend and friend to all of the participating chefs and breweries.

His roots run deep in the city; after graduating from the Culinary Institute of America and bouncing around the country for years cooking at restaurants and catering companies, Ferguson finally landed in Durham in 1998 and cooked at some of its best restaurants before launching his own catering company, Durham Catering, in 2000, and later the city’s first food-truck smash, Only Burger.

His resumé helped Rise burst onto the scene in 2012; the brand is a local media darling. But it’s also created an interesting challenge for the Rise team: how to create a streamlined multiunit operation in an area with a fierce loyalty to independent operators. Ferguson points to his decision to switch from made-from-scratch doughnuts to using a prepared mix soon after Rise opened as being a leap of faith for the sake of the operation—one that led to increased sales.

“You don’t make a decision lightly about using a doughnut mix in Durham. You don’t make decisions lightly if you’re going to cut corners,” Ferguson says. “You have to feel really good about your decision-making process, because you have to justify it to other professionals. Other professionals, when I talk to them about it … they get it. But the hipster kid doesn’t get it.”

The chef reputation is critical to Rise’s success. These aren’t just any biscuits and doughnuts the brand is offering; these are chef-designed biscuits and doughnuts, intended to make kids and foodies alike drool. And in the Triangle, at least, the food community has rallied around Rise’s quality product and quick ascent.

But Ferguson knows that it’s harder to re-create in other markets the kind of love and understanding you garner from a hometown crowd. He knows his reputation as a chef won’t precede him in other cities like it did in Durham. That’s why he’s being proactive about Rise’s growth into new markets, planting seeds by getting to know chefs in those cities, eating at their restaurants, and learning more about their food communities. It helps that Rise is targeting foodie cities for growth, opening franchise or corporate locations in places like Nashville, Tennessee; Charleston, South Carolina; Dallas and Austin, Texas; and Richmond, Virginia.

Fostering a chef-forward mentality helps give Rise its edge, says Sarah Mosbacher, director of business development at Rise. She describes the Rise experience as being authentic and real, which jibes well with the creative nature of chefs.

“The challenges we’ve had would all seemingly be easily addressed if we hired people who were just quick-service management people who were good at carrying out orders and checking off checklists. But what makes it different and special would be lost,” she says. “Chefs are … artists in their own way, and they’re punk rockers and they’re rebels. We love those people, because Tom is those people, and all of us in some way are doing this because we are those people and don’t want to lose that.”

Increasingly, those people can be found in more far-flung places than foodie cities. But for now, growth will be focused on markets like Durham, cities where customers are looking for high-quality, chef-driven options.

CFO Seamans says the company will focus first on cities with “a high percentage of food-oriented, sophisticated restaurant fanatics.”

“We’ve got to have the demographics: We’ve got to have kids, and colleges never hurt,” he says. “But we start off in a place where people are passionate about the food, and a multicultural environment where people are used to trying and experimenting with foods from multiple cultures. That will give us every chance to succeed.”

February 2016

Ferguson’s house in the affluent southern suburbs of Durham is crawling with people; dozens of kids chase each other to the basement and back and adults swarm the kitchen, where pizzas are slid in and out of a wood-fired oven, and the deck, where beer chills in coolers.

This is the Rise family, immediate and extended. Store managers are here; so are franchisees, including Ryan and Allison Shoaf, who had just inked an agreement for three stores in Charlotte, the first deal outside the Triangle. Many people from Ferguson’s career, mentors and colleagues alike, are here. When their attention isn’t on each other or the food, it’s on the flat-screen TV at the front of the living room, which is airing Super Bowl 50. Despite the fact that the home-state Carolina Panthers fall behind the Denver Broncos early, the attitude in the house remains upbeat.

Everyone tied to the franchise is quick to illustrate the familial demeanor that pervades Rise and its people. And many direct that attitude back to Ferguson, who frequently talks about his passion for investing in people and helping them avoid the same mistakes he made early in his chef career.

“Tom is a dying breed of mentor,” says Mosbacher, who joined Durham Catering a decade ago and has worked for Ferguson off and on ever since. “He would call me a couple times a year just to check in, but also to tell me what he was up to—which, when you’re Tom Ferguson, is always really interesting, because he’s a serial entrepreneur and he’s driven and he’s unlike a lot of other people you come across.”

Some of Ferguson’s drive comes from struggling as a kid with dyslexia. Some of it comes from his high school football days in Texas, some from his time in the Army, and some from his success in kicking drug addiction. Whatever the motivator, he’s designed the Rise system to protect its people component. The store hours—7 a.m. to 2 p.m.—ensure nobody’s missing time with family. The online dashboard available to franchisees, the one that shows performance metrics, is there to spark a little competition, but also to encourage collaboration. Employees all make a living wage as well as benefits, and chef managers earn a healthy salary on top of a slice of the store’s profit.

“Tom has proved that if you’re on top of your business ... you can still pay for [employees’] insurance,” Wiles says. “We pay for half of their insurance here. Tom does not have to do that. He pays half their insurance and they all make a living wage. Most of them are making $10.10 an hour plus tips, which are $2.50–$3 an hour.”

Part of the challenge for Rise as it grows is maintaining the family feeling. Representatives from five stores fit in Ferguson’s house—from 100 stores, not so much. Seamans acknowledges that it will be impossible to keep the familial attitude completely intact as Rise grows, but says the corporate team will continue to build camaraderie within the system any way it can.

“We’ll always be connecting people, especially groups within a geographic area,” he says. “If there’s a shortage of flour at one store, and it’s a Sunday and they can’t get a delivery, what do they do? They have to have those relationships in place to help each other.”

January 2015

Ferguson walks along a sidewalk that splits between the iconic American Tobacco District and the Durham Bulls’ ballpark, two brick behemoths that serve as a gateway to downtown. Durham Catering recently secured the rights to the foodservice program at the ballpark, and he heads straight for a small outpost just off the third-base line in left field that used to be a national fast casual.

Circling the outdoor space, Ferguson points out features of a fast-casual chicken joint he plans to open there, and he gestures toward a patio just outside the ballpark’s gates, explaining how customers will be able to access the chicken concept even when it’s not game time. He’s got branding, a menu, and name all figured out, and he’s gone so far as to do research around the country and purchase equipment to test the product.

In a few months, he’ll drop the plans for the chicken brand, and he’ll sell Durham Catering to one of its employees so he can focus solely on Rise. But the chicken concept is no anomaly; Ferguson has a knack for ideation and recognizes opportunity when he sees it. It’s not the first sister brand he’s conceptualized. In fact, an earlier idea—a quick-service pasta concept called Roll Out—went so far as to operate out of the first Rise one day a week for a few months before Ferguson pulled the plug because it was too complicated.

“It’s almost like a hobby,” he says of the conceptualization stage. “Maybe it’s like having train sets, I don’t know. But it’s fun to go through that process. To hit one like [Rise] is really nice.”

Rise’s conception goes back to Ferguson’s Only Burger days, back when he dreamed of a suite of quick-service concepts. The initial plan was to do a better-biscuit brand, but after he and Wiles traveled across the country sampling biscuits—and after they visited Portland, Oregon’s famed Voodoo Doughnuts—he decided they would do both. And while that idea was ultimately the one that struck gold—the one-two punch has drawn customers among all demographics and provides just enough variety to keep them coming back for more—it hasn’t stopped the founder from dreaming up future plans.

“Tom is a spectacular businessman with spectacular instincts,” Seamans says. “I recognize that that is not me. But I’m going to help him achieve his dreams. Whatever direction Tom wants to go in, it would take something extraordinary for Brian and me to veto him down.”

Mosbacher says Ferguson’s endless curiosity has benefited Rise in many ways, as he’s constantly keeping up with innovations and trends that translate well to the business. But where some might get caught up in constant tinkering, she says, Ferguson is able to stay focused on those things that truly advance the brand.

“In my experience, the better of an idea person you are, the poorer of an execution person you are,” she says. “And I think it’s easy to look at Tom and think the same thing—when he’s going whole hog on any given idea, he’s a dog with a bone. But he’s also shockingly good at not just implementing, but also long-term vision.”

July 2014

In a buzzing coffee shop at the southern edge of Durham, Ferguson huddles over a cup of coffee, talking out details of Rise’s just-announced deal with Fransmart, a Washington, D.C.–based franchising consultant that provides upstart companies with resources to replicate via franchising.

Fransmart CEO Dan Rowe discovered Rise on a research trip to the Triangle and invited the team up to D.C. to talk about a potential partnership. When Rowe challenged them to get profit margins up to 25 percent from roughly 17–18 percent, Ferguson took it to heart, went back to the store, and made some tweaks that brought margins up to 25 percent—in just one month.

“He’s a smart guy, and everything he said was true,” Ferguson says of Rowe. “Any time we’ve deviated off [his advice], it’s come back to bite us, but we’ve started to realize what he was talking about in the first place.”

Rowe says that of all the executives at brands he’s worked with—including those from major national chains like Five Guys and Qdoba—Ferguson “ranks at the top” for carefully creating a customer experience. That intense focus has helped Rise post financial numbers that are highly attractive to franchisees.

“His original store in the beginning was doing more than an average Five Guys in half the square feet, and then that store has continued to grow another 50 percent,” he says. “But all of the stores are really strong. He’s really bought into this idea that you’re building relatively small, efficient stores that are doing more than the average fast-casual concept in half the square feet.”

The sky is the limit for Rise, Rowe adds, noting that the biscuit-and-doughnut combo will help it grow into the 40 largest U.S. markets, and likely into international markets, as well. He says it will do to breakfast what Five Guys did to the burger segment.

It’s lofty praise for such a small brand. But Ferguson is undaunted. As he huddles over his cup of coffee—as the potential of what he can accomplish seems to sink in with every word—his face keeps straight, his temper even. All the work ahead of him, all the challenges a franchisor must go through, will simply refine what he’s hoping to accomplish.

“They don’t scare me, they’re just challenges,” Ferguson says. “That’s just part of the fun to me.”

This story originally appeared in QSR's August 2016 issue with the title "Rise to the Occasion."